Fewer miles, more savings

Insurer’s tracking program taps into ‘drive less, save more’ spirit

It’s been years since Duane Vrieling drove like a predictable suburbanite — or even a predictable urbanite.
So, he figured, why was he paying for his car insurance like one of them?
So Vrieling, who spends most of his days as a software salesman working out of his home in Northwest Portland, has enrolled in an unusual car insurance program available in only three states — including Oregon.
The program, offered by Progressive Insurance Co., allows drivers discounts of up to 25 percent off regular rates based on when and how much they drive.
But it requires more than the honor system. It requires people to plug a small device into the steering column of their car, which then uses the car’s computerized systems to monitor how, when and how much the car is being driven.
“On average, people who drive more have more accidents than people who drive less,” said Michele Strub-Heer, product manager for Progressive Direct, which is offering the insurance.
Progressive’s program, called TripSense, is “for people who drive fewer miles than the average or drive at less-risky times of the day,” Strub-Heer said. “For us, we’re always looking for more accurate ways to price insurance. And we can reward people who take control of their driving habits, drive less and drive less risky.”
Such programs may become more common as insurance companies are finding ways to use technologies to more accurately assess risk and price their insurance.
“I think there’s a much greater sophistication in underwriting auto insurance right now,” said Claire Wilkinson, a spokeswoman for the Insurance Information Institute, a public information group created and supported by the nation’s insurance companies.
“And, to the extent new technology comes on board that helps insurers more accurately price a risk — leading many policyholders to benefit from premium discounts — I think that’s a trend.”
Progressive experimented with a similar program in Texas for a short time several years ago. When the technology allowed the program to be operated more cheaply, the company started a similar program in Minnesota a few years ago. It rolled out the same insurance product to Oregon and Michigan late last year.
“It has a lot to do with Oregon being a green state and the interest in doing things that would improve the environment,” Strub-Heer said.
It also may have something to do with the Oregon Legislature’s passage four years ago of a law that gives insurance companies tax credits for offering such a program — of up to $300 per auto insurance policy sold.
The tax credit hasn’t had a huge impact — no companies came forward with such a program until Progressive did late last year. Early this year, State Farm representatives told state insurance officials that the company would begin a similar “experimental” program limited to about 200 customers in the Portland area.
“It hasn’t seemed to have had much impact so far,” Oregon Insurance Division spokesman John Piper said of the 2003 law.
For participants, the innovative insurance has had enough of an impact, however.
With Progressive’s insurance, policyholders get a 5 percent discount on their insurance simply for participating in the program. They plug the small device into the streering column of their car — it works only on cars made in 1996 or later — and the device captures information on a range of things, including when and how much they drive, their speeds and their acceleration and braking.
Participants then periodically detach the device from their car and attach it to their home computers to download and view the information. They can then either send that information to Progressive or not, Strub-Heer said.
If they do, they can get further discounts of up to another 20 percent, based on how many miles they drive and how much they drive during times when the most accidents occur — from midnight to 4 a.m. and during heavy traffic in the morning and late afternoon. The information won’t be used to increase anyone’s rates, Strub-Heer said.
Strub-Heer said Progressive won’t be using the speed, acceleration and braking information for discounts, but for research on whether that information could be used to assess risk of accidents.
Strub-Heer would not disclose how many customers Progressive had signed up in the program’s first few months, but said: “I can tell you the Oregon sign-ups are meeting expectations. So we’re looking forward to saving money for a lot of Oregon policyholders.”
State Farm’s program is not yet being used to give customers discounts, but only for research, said a company spokesman.
Part of what the company is analyzing before it moves into such programs are the privacy issues that undoubtedly will be raised if these types of programs become more common, State Farm spokesman Richard Luedke said.
“Obviously, there are complications,” he said. “The biggest is the privacy issue.”
But Vrieling said he doesn’t believe what the device tracks is too intrusive.
And he said he doubts the device has had any effect on how much he drives. When he needs to get around town, he often does so by bike and has been doing that for years — regardless of his car insurance, he says.
But, even though the discounts don’t come from his driving style — like his accelerating or speeding — “it made me a little more conscientious as far as how I drive,” he said.
Another Progressive customer, Stacey Branch, said she’s also been conscious of driving well with the new device. “If you’re generally a crazy driver, I guess you wouldn’t want to have one of these,” she said.
But the device hasn’t really changed when or how much she drives. That’s stayed the same — driving into downtown Portland to work from Happy Valley, and driving kids to school and Girl Scout meetings. “We don’t take trips,” she said, joking: “We have kind of a boring life.”
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